The Next Step to Boost Islamic Finance Education

MALAYSIA is recognized globally as a leader in Islamic finance. The country ranked among the top three Islamic finance markets worldwide in terms of overall development, according to the Thomson Reuters Islamic Finance Development Report 2018.

Malaysia’s Islamic banking portion also grew sixfold over the last 30 years and now holds a market share of over 30%, while takaful has also registered double-digit growth, outpacing conventional insurance expansion.

Yet, one mustn’t get complacent as this would hinder the development of the industry. In a recent lecture at Durham University, UK, Malaysian Education Minister Dr. Maszlee Malik highlighted knowledge and research as important tools that can fuel strategic initiatives and innovation in the industry.

Taking Higher Education to the Next Level

Maszlee said one of the bigger challenges in the development of the industry is the shortage of national or international accreditations, as well as professional bodies.

“There is a need for a dedicated institution that comprehensively deals with the accreditation of industry-based learning programs,” he said.

On the bright side, Malaysia is making valiant efforts to address these concerns, as evident in the proliferation of programs and research projects now offered at universities in the country.

Institutions have also been established to nurture talents and build higher skill sets.

These include the International Centre for Education in Islamic Finance (INCEIF), the International Shari’ah Research Academy (ISRA), the Chartered Institute of Islamic Finance Professionals, the Association of Shari’ah Advisors in Islamic Finance Malaysia, and the International Council of Islamic Finance Educators (ICIFE).

To fill in the gaps in the higher education sector, both academicians and students must be exposed to real-life market practices to tally textbook teachings with what’s happening on the ground, said Prof Dr. Mohamad Akram Laldin, ED of ISRA.

“We really need to have more market practitioners to be allowed to teach within the university, since the practitioners have their own experience and exposure. “Through my own industry contacts, I know many people who are willing to contribute their time without being compensated. This is the kind of spirit we really need to put on the ground, for more industry participation into our education curriculum,” he said.

Prof Dr. Mansor H Ibrahim, deputy president academic of INCEIF, also called for greater market exposure and committed involvement of industries in Islamic finance education to be part of Islamic finance programs.

He added that, however, having industry captains in the classroom is not sufficient, although it would help in bridging academia with the real world.

“We also need to bring the classroom to the industry. What I mean here is an industry-academic partnership to create a project for students to address real issues currently faced by the industry: Action learning or action-based learning,” Mansor said.

Financing Higher Education for All

Speaking at Durham University, Maszlee lauded efforts such as Khazanah Nasional Bhd’s RM100 million seven-year sustainable and responsible investment Sukuk. The proceeds from the Sukuk were channeled to Yayasan AMIR, a non-profit organization that works to improve the accessibility of quality education in local public schools.

However, he said the approach of “throwing money at our problems”, which in Malaysia’s case involves providing student loans via the National Higher Education Fund Board, lacks sustainability.

Maszlee said Islamic finance can help in providing education for all through attractive savings and investment products to help parents and students prepare for the future. He also suggested the endowment or waqf system, as practiced by universities abroad.

“Malaysian universities are actively moving towards using the waqaf model, although uptake among benefactors has been sluggish. Crowdfunding can perhaps drive this forward,” he said.

Similarly, Mohamad Akram suggested the issuance of waqaf Sukuk, for which there are permanent and temporary waqaf models.

“Another way, which does not specifically fund students, involves using Sukuk as an instrument to build student accommodations in universities,” he said.

This would also provide a good stream of income for the universities involved. All in all, this sort of social use is very much in line with the objectives of Islamic finance, he said, adding that more discussion is required to push the agenda forward.

For Prof Dr. Syed Musa Alhabshi, president of ICIFE, investment rather than financing education directly is the way forward. Financing or debt-based facilities for those lacking financial capacity and literacy may be burdensome and could lead to long-lasting debts.

“Public funding of schools and tertiary institutions need to be reciprocated with services to the nation. For example, let us consider public funding with reciprocated government or social services,” Syed Musa said.

He also called for the establishment of special public-private entrepreneurial funding to support high potential prospects with entrepreneurial mindsets, to harness the latest technologies.

Originally published on https://themalaysianreserve.com